ICE to launch Houston oil contract, building on export growth

(Reuters) – Intercontinental Exchange on Tuesday said it would launch a crude oil futures contract deliverable in Houston later this quarter, capitalizing on the growth in U.S. exports of crude oil that have risen to about 2 million barrels a day. Houston has become the pricing center for U.S. crude oil production and exports, and the new contract is designed to serve hedging and trading opportunities in that market, ICE said in a statement. ICE said the Permian WTI futures contract will provide price discovery, settlement and delivery at Magellan Midstream Partners terminal in East Houston. Brokers and market participants said the Houston crude market has ample liquidity as Gulf Coast grades are regularly traded by exporters and foreign buyers of U.S. crude. ICE’s move is expected to boost liquidity further and make hedging for export cargos more flexible. Companies are currently spending millions of dollars building infrastructure to facilitate trading and storage up and down the Gulf Coast, and producers are increasingly shipping crude directly to seaports such as Houston. A new futures contract in Houston “should only help the Permian assets develop more quickly,” said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.… continue reading

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